Today’s lesson is the next best thing to owning this building!
Hey Rainmaker, pretty much everyone I know today who got rich because of their own effort would not have done so if it weren’t for what I’m about to tell you.
Do people get rich without it? Yeah, there are a few.
Is it much harder to get rich without it than with it? Absolutely.
We’re going to talk about continuity.
Subscriptions.
Membership.
Whatever name you put on it, it’s the agreement that you’ll continue delivering value on a consistent and regular basis, and in exchange you get money showing up from the customer on that same consistent and regular basis.
This came up because of a conversation I was having with a friend of mine, who is looking to make this a component of his business.
Right now he does copywriting and consulting, and he wants to apply the skills he’s developed there to building a continuity business. Not necessarily for his copywriting, but in a different niche.
Good news? If (actually, when) he pulls it off, it’s going to be the source of a constantly-growing revenue stream that could totally transform his life.
Bad news? It’s simple, but not always easy to pull off.
Hopefully what I have to share with you today will be at least a little useful for him (he reads these dailies) and for you as you explore building this component of your business.
How I first discovered the massive wealth-building power of continuity programs…
When I got my first marketing job, the company was doing somewhere shy of $3 million per year. They were a publisher of career training for IT professionals, focused on career certification.
They’d grown rapidly by identifying a need in the market — video-based training for IT certifications. And by offering individual training packages that fulfilled that need.
The guy before me (who had moved up to President of the company and made space for me to take over in marketing) had created a huge impact in the business by starting to package products, rather than sell them one-off.
But as I was getting there, we were on the cusp of a new approach that would change the business forever…
And set the business on a growth trajectory that has — as far as I understand — taken them from $3 million to $18+ million, just 10 years later.
The new approach?
Selling a subscription to the entire catalog of training. For a fixed annual price (it’s now sold monthly), you could get access to all the training they’d ever released, as well as all the training that would come out during your subscription.
It took off like gangbusters. By the time I left a couple years later, we’d more than doubled the business with the exact same stream of new customers coming in every year. We simply offered the subscription as an upsell from the individual purchases.
Folks serious about staying ahead in their technical knowledge would get the subscription, and they’d stick with it.
Retention rates were in excess of 85%. Which meant that even though we didn’t have any increase in the number of new customers, we had customers coming back again and again and again (when in the past they’d usually buy a training video or two then disappear).
Not only that, the subscription was more expensive (understandably) than any of the packages of training products. Which meant even in their first year of a subscription, the average subscriber was suddenly worth a lot more as a customer than they would have been otherwise. By the time I left, our average customer lifetime value (LTV) had more than doubled.
And lest I be accused solely of money-grubbing and forgetting this one important element, the subscription customers were better-served, too.
If they were considering upgrading their resume with a new certification, all they had to do was log in and they had training from a world-class trainer just a couple clicks away. If they had a problem they needed to solve at work, they could take 10 minutes to watch a highly-specified piece of training that would walk through their solution. They had the training they needed, when they needed it — no shopping, decision making, or going without.
The case for subscription models makes a TON of sense, but not just in the training business…
Of course, we’ve known subscriptions all our lives. Magazine subscriptions. Newspaper subscriptions. Newsletter subscriptions. Cable TV. Phone service. Internet. You could even argue that our utility service is a kind of subscription.
If it’s information, anything where the subject matter is deep enough that it can never be covered in full makes a great subscription product. Also, anything news-related, or that reflects changing market conditions (think investing) works great.
Alternately, if you can provide a service that someone wants “always on,” a subscription makes sense. Web hosting is a perfect example. So is your phone service, or cable TV. You may only use something like your home phone for minutes a day, if that (especially since cell phones became ubiquitous), but if it’s important for you to have that home phone, you’ll happily pay every month.
And then there’s the other subscription “goose that just keeps laying the golden eggs,” consumable products. The supplement industry (as well as the prescription drug business) thrives on the fact that in 30 days, that bottle will be empty. Food subscriptions are surprisingly common. “Beer of the month” and “wine of the month” clubs make great gifts — to yourself or others. Gary Bencivenga retired from copywriting, but started an “olive oil of the month” club. Cosmetics, too. Apparently Amway’s rule was “if it doesn’t go down the drain, we don’t sell it.” Guthy|Renker adopted much the same rule, and has built a multi-billion-dollar direct response empire (that they will secretly tell you is really a continuity empire).
And if you don’t think this applies to your business, think again.
Apparently just before selling off his menswear retailer (think suits and other dress wear for men), Bill Glazer (who you may know from his previous partnership with Dan Kennedy in GKIC) introduced a continuity program into that business. While I don’t think he was sending guys a tie every month, he did get them to agree to continuity billing in exchange for special access to the store, and special discounts. Exclusive shopping days on brand new merchandise. Exclusive sale days for members only. Exclusive discounts sent to their home. Exclusivity that some subset of his customer base was happy to pay for.
AARP is an interesting case study. They were really originally a front for selling insurance. Which they brilliantly built into a membership program, with membership perks. From there, they’ve actually become as much a membership business that happens to give you access to deals on insurance, as much as they are an insurance business with a membership veneer.
AAA is another interesting case study. We all need roadside assistance sometimes. Sometimes it’s years between needing help. Other times it’s much more frequent. With AAA, for a set annual fee, you have that available when you need it. Throw in a few more perks, and suddenly you have a membership card many folks won’t leave home without! (Just to really make this clear: this is a membership program… For the towing business!)
If you haven’t found a way that continuity, subscriptions, or membership can be built into your business, I’ll argue you haven’t looked hard enough!
If you want me to find it and build the model for you in your business in 4 hours or less, with a specific implementation plan, click here to register for a half-day of consulting with me. (Normally $3,500 — currently $2,800 through Saturday, October 31st.)
Remember, the first continuity program I helped build turned a $3 million business into an $18 million business. Makes that fee seem paltry, doesn’t it?!
Finally…
5 steps to build a continuity or membership business from scratch…
This is a rapid-fire approach to getting a continuity business off the ground. It is meant to bring your first customers into the fold ASAP, so you can start to have some recurring revenue to invest back into further development.
If you have unlimited time and an unlimited budget, I pity you because you’ll take longer and make more mistakes than if your back is to the wall, but you should also know this isn’t necessarily the approach you should take.
Okay, here are the 5 steps.
Step 1: Find a market problem that can be addressed on an ongoing basis.
Anything news-related or very deep subject matter can work. Alternately, a product that “goes down the drain” — something that gets used up.
You either have to be passionate about the product/subject or have an expert on your team who is and who can do the majority of the content for it. Even if you’re selling a physical product by continuity, you will probably have to create a decent amount of content for it.
Ideally you’re going to have a USP — a point of differentiation or positioning that makes you a no-brainer choice for folks who buy into your buying criteria. Why should someone join your membership versus all the other options available to them in the marketplace, including NOT agreeing to spend however much with you every month and keeping that money in their pocket for other things.
Step 2: Create a bare-bones continuity program — a minimum viable product.
Although the startup world now claims the idea of a “minimum viable product,” it was something that direct marketers have basically been doing for a very long time.
In fact, some direct marketers use what is called a dry test. This is illegal in many places, so I’m not necessarily recommending it, just showing you what it is. A dry test is an ad you run and an offer you make for a product that’s not been created yet. When you get a flood of orders, you either create the product really fast, or offer refunds due to “supply issues.” But then you roll out when you know you have a winner — which you were able to figure out before the product was even real yet.
The idea here is that you want SOMETHING to sell ASAP to make sure the market is into it.
The WORST thing you can do is to spend months, years, decades on developing your pet project to perfection, just to realize that nobody wants it and nobody cares.
Step 3: Create basic selling messages that are enough to get early adopters excited, but that you can get done fast.
It would be helpful to use the Ask process here. (Actually, all the way up to this point.)
Like you don’t necessarily need to spend excessive time on the product to test the water, you don’t need to spend excessive time on the marketing, either.
Capture your excitement and big idea behind the continuity program. Get it down on paper, or in whatever media ASAP.
You will refine the message later, but what you want to find and convert are those people who are willing to be early adopters, who are as excited about your ideas as you are (and who will be willing to put up with your minimum viable product because it means they were one of the first).
In this regard, your message doesn’t have to be perfect. Your design definitely doesn’t have to be perfect. Just get going!
Step 4: Buy traffic to bring early adopters through the door.
Here I’m referring to web traffic, although maybe you want to use some other media. The idea is that you want to put your early marketing with your early offer in front of the core of your target market ASAP, so you know if your idea has a pulse.
If not, you’ll need to pivot — change the offer, change the market — or move on. That’s okay, just learn from it.
Ideally you want to build a list as you do this (or at the very least do remarketing), so you can continue reaching out to the folks who didn’t buy. But consider early on that it’s as important to make your first sales as it is to build a free list. Buyers pay your bills, email subscribers don’t.
Incidentally, it might make sense to make a tripwire or welcome mat product, but don’t let that get in the way of developing a basic continuity program. The benefit to having a front-end, easy “yes” offer (like my book, The Copywriter’s Guide To Getting Paid) is that sometimes it’s hard to make the first sale when it’s an ongoing charge. Alternately, you could consider a $1 trial period, or some other low-risk first transaction for people to agree to.
Step 5: Refine through time to bring in new customers cheaper and improve retention in your program.
Since you did everything fast, it will be far from perfect. The good news though is that you will have customers sending you money every month (or on some other recurring basis) that will provide positive feedback for continuing to improve.
Once you’ve got a continuity business going, find ways to make it better and better and better for subscribers. This will increase retention and make it more profitable. If you have a fall-off point (at the end of a trial, after a certain number of months), throw in a bonus that is delivered in installments, to carry them through and keep them subscribed.
Then, figure out what you can do to bring as many new folks through the door as possible. If you haven’t tried a “welcome mat” or intro offer, figure out what you can do. (The free book plus shipping is MASSIVE for this in information businesses.)
Experiment with different offers, and different marketing. Many newsletters have an ever-rotating series of bonus reports that come with a new subscription — you’d be surprised how many businesses can benefit from these information-based reports. (e.g. A food subscription business — say, a “jelly of the month” business — could offer a recipe book or meal guide as a bonus to new subscribers.)
The good news is the better you get at bringing people in, and the better you get at keeping them, the more your customer base, revenue, and profits will rise. And if you’re delivering a great customer experience (which you MUST be for a solid continuity business), your momentum will be practically unstoppable!
Again, if you want me to show you where in your business you can add this kind of continuity business, this is a perfect topic to dive into in a half-day consultation.
Click here to book yours, at 20% off my regular rate through October 31st, 2015.
Yours for bigger breakthroughs,
Roy Furr
Editor, Breakthrough Marketing Secrets
